By
Bill Beggs Jr.
Call them architectural archaeologists. Because urban-savvy
investors and developers from the coasts, Chicago and other
so-called first-tier cities have really started to dig St. Louis.
Vacant or underutilized buildings of the 19th-century and early-20th-century
industrial boom years have long attracted hometown companies
not only aware of their historical significance, but also their
potential role in accelerating the city’s revitalization. But
within the last five, 10 years or so, out-of-state entrepreneurs
with experience revitalizing cities and urban neighborhoods
that are bustling again, and in many cases have matured, are
turning to The Gateway City to be part of the process here.
Heisman
Properties of California entered the St. Louis market
when it purchased the former A.D. Brown Building,
now known as the Meridian. |
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Irrespective of where investors are coming from, the economic
impact is being felt here. For example, investment since 2000
has been nearly $4 billion in downtown St. Louis—and $5 billion
for the City overall. The folks with helmets and hammers, the
new residents and merchants, are circulating their cash right
here in River City. From the Loft District (make that districts,
plural, as the geographic boundaries start to blur and overlap)
to Soulard, Lafayette Square to Grand South Grand, and rolling
out to the four corners of the compass from the Central West
End, neighborhoods, institutions and any number of taxing entities
are thriving.
But as an urban area reawakens and more would-be early birds
arrive, worms become scarce. Or harder to swallow—pricey, that
is. A decade or so ago visionary developers who were in on the
ground floor in New York City’s Harlem—one-time symbol of urban
decay and the disintegration of the grand public housing experiment
embarked upon during LBJ’s Great Society—were venturing into
a dicey section of town. Many hesitant investors now wish they’d
taken a gamble on former president Clinton’s new neighborhood,
Chicago’s Lincoln Park, or once-blighted neighborhoods from
L.A. to Denver to Miami.
It just took awhile longer for the process to begin apace here.
“State of Real Estate 2006” is a presentation by Colliers International/Turley,
Martin Tucker that surveys the projects and prospects in the
region (www.ctmt.com). Some out-of-town investors leave such
sessions or stand up after clicking off the DVD with “who’d
a-thunk it?” looks on their faces. This delights St. Louisans
such as Tom Wilcox, executive vice president and head of commercial
real estate for Southwest Bank.
TOM
WILCOX
executive president & head of commercial real estate,
Southwest Bank |
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“It’s exciting that St. Louis is being discovered by so many
people in the market,” says Wilcox. “D.C., Baltimore, New York;
once they’ve been built up, their returns go down. Here, occupancy
is stable. There’s certainty of return, a good employment base.
“I’ll meet people from L.A. and New York who’ve been brought
in to listen to presentations, and they’ve come away very impressed.”
That’s essentially how one Chicago investor had his eyes opened
to St. Louis, in 1999.
Steve Anrod, division president of Silverstone Communities-Midwest,
had run an ad in The Wall Street Journal for his company’s “boutique
high-rise” in Lincoln Park. It only had to attract the attention
of one St. Louisan. “Out of the blue” one day, Anrod got a call
from an entrepreneur who thought the Central West End was ready
for a similar project, in a distinctive building. Once Anrod
jumped on a plane to come down and see, he agreed.
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California-based
Heisman Properties plans to restore the Chemical
Building (721 Olive St.) to its original grandeur.
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The lifelong urbanite immediately saw promise for the vacant
13-story apartment building at 17th Avenue and Olive Street,
for the time being called 60 Plaza Square. Built in 1961, the
property was designed by the renowned Harris Armstrong in conjunction
with HOK architects.
“At the time, Harris Armstrong was much more famous than HOK,”
Anrod points out. “Basically, he was the Frank Lloyd Wright
of St. Louis.”
Clients appear to have agreed—with their wallets. At press time,
only one of the 89 units—most featuring expansive windows, over
half with a balcony—remained up for grabs.
STEVE
ANROD
division president, Silverstone Communities-Midwest
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Anrod et al. have an idea that what happened in their cities
is happening in St. Louis, and will continue to. In the once
“downright decrepit” streets of Chicago’s Lincoln Park near
DePaul University, a single-family lot of 25 by 125 feet today
fetches upwards of $1.3 million. Same thing goes here. Or will.
A finite number of suitable structures with “great bones” downtown
promises that the Loft District will be built out one day. Suburbia
could expand continuously into the next county, and eventually
across the next state line. But since urban supply is limited,
renovation can only go so far. Plus, more and more people seem
attracted to the accessibility of incomparable amenities, such
as the Missouri Botanical Garden, Tower Grove and Forest parks,
all just minutes away by public and private transportation—to
be sure, somewhat fewer minutes on MetroLink than by bicycle.
“We have somewhat of a crystal ball,” notes Anrod. “We were
20 years ahead, and can use the knowledge we’ve gained in a
mature market.”
The acquisition marks the first development in the Midwest for
rapidly expanding Silverstone, which also has divisions in Southern
California, Northern California, Colorado and Florida.
“We think this market will be a great springboard for our Midwest
operations,” says Tom Bruin, Silverstone’s CEO. “The City of
St. Louis has a solid employment base, good existing housing
stock, and the essential mix of business, culture and entertainment
that supports for-sale, infill housing. The market also has
room for growth, especially at the entry level where this property
is positioned.”
This is the prime position that many out-of-state investors
have settled into. Consider California-based Heisman Properties,
established in 1999 with a vision toward renewing interest in
urban living.
The company recognized a resurgence of people choosing to reconnect
with city life and began acquiring properties that would offer
this lifestyle. “We set out to capture this movement by implementing
a redevelopment strategy focused on converting obsolete office
buildings into residential housing,” says Curtis Schroeder,
principal.
In 2003, Heisman acquired The Union Building in Los Angeles,
with an aim to restore and renovate the property into 91 market-rate
units. In just over 18 months, Heisman sold the building, yielding
a 58 percent return to investors.
JIM
CLOAR
president, Downtown St. Louis Partnership
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“We expect continuing change in demographics, lifestyle preferences
and ever-increasing commute times to drive a significant portion
of the population to choose an urban lifestyle,” says Chad Forrest,
vice president of Heisman, which entered the St. Louis market
in 2004. The company purchased the former A.D. Brown Building
(The Meridian), and recently added the Chemical Building to
its portfolio.
“A sure sign of our downtown progress is the ability to attract
quality out-of-state developers,” points out Jim Cloar, president
of the Downtown St. Louis Partnership. “Both the A.D. Brown
Building and the Chemical Building are extremely significant
historically and architecturally.”
Meanwhile, Heisman has begun prospecting buildings in Detroit,
Kansas City, San Antonio and elsewhere. Plans are to acquire
two to three new buildings in 2006 with properties that parallel
the formula used in St. Louis.
And to think such folks used to call us The Great Flyover. Harrumph.
Maybe these so-called first-tier cities will really take notice
when we take another World Series from one of them—eventually.
